Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work. It is recommended that you use Excel and its built-in formulas to work on the problems.Problem 1. Calculate the future value of $3,500, compounded annually for each of the following:10 years at 7 percent.15 years at 9 percent.20 years at 5 percent.Problem 2. Calculate the present value for each of the following:Problem 2. Calculating Present ValuesPresent ValueYearsInterest RateFuture Value 54%$15,250 87%$30,550 1210%$850,400 2015%$525,125Problem 3. Calculate the interest rate for each of the following:Problem 3. Calculating Interest RatesPresent ValueYearsInterest RateFuture Value$2822 $325$6076 $891$32,60012 $142,385$57,43522 $463,200Problem 4. Calculate the number of years in each of the following:Problem 4. Calculating the Number of PeriodsPresent ValueYearsInterest RateFuture Value$765 6%$1,385$845 9%$4,752$17,200 11%$432,664$23,700 14%$182,529Problem 5. Refer to the cash flows listed for the Kelly Company investment projects in the table below. The discount rate is 6 percent. Calculate the present value of these cash flows as well as the present value at 12 percent and at 17 percent.Problem 5. Present Value and Multiple Cash FlowsYearCash Flow1$7502$8403$1,2304$1,470Problem 6. Value the bond Midcorp has issued, with the following characteristics:Par: $1,000.Time to maturity: 28 years.Coupon rate: 7.50 percent.Semiannual payments.Calculate the price of this bond if the yield to maturity (YTM) is each of the following:7.50 percent.9 percent.4 percent.Problem 7. Calculate the bond yield in the following scenario: Two years ago, Walters Electronics Corporation issued 20-year bonds at a coupon rate of 6.75 percent. The bonds make semiannual payments, and currently sell for 106 percent of par value. Calculate the YTM.Problem 8. Calculate the stock value in the following scenario: The next dividend payment by RST Incorporated will be $3.45 per share. The dividends are projected to sustain a 6.50 percent growth rate into the future. If RST stock currently sells for $67 per share, what is the required return?Problem 9. Calculate the stock value in the following scenario: Nickels Corporation will pay a $3.10 per share dividend next year. The company plans to increase its dividend by 4.25 percent per year, indefinitely. How much will you pay for the company’s stock today if you require a 12 percent return on your investment?Problem 10. Provide a three-column table identifying four key characteristics of stocks (equity) and bonds (debt) and comparing them. Briefly discuss why a firm would prefer one over the other as a method of financing.

instructions_to_complete_the_assignment.docx

Unformatted Attachment Preview

Don't use plagiarized sources. Get Your Custom Essay on

Calculating Financial Values

Just from $13/Page

Complete a series of 10 problems in which you calculate the time value of money,

the price of a bond and yield to maturity, and the stock price and required return as

well as compare characteristics of stocks and bonds.

Note: The assessments in this course build upon each other, so you are strongly

encouraged to complete them in sequence.

Compounding and discounting cash flows might be the most important topic in the

study of finance. The practice of discounting cash flows applies to everything from

mortgage, auto, and student loan calculations to valuing bond and stock prices and

deciding which projects an organization should invest in to create value for its

shareholders.

By successfully completing this assessment, you will demonstrate your proficiency

in the following course competencies and assessment objectives:

o

o

o

Competency 1: Apply the theories, models, and practices of finance to the financial

management of the firm.

Calculate time value of money problems, including future value, present value,

interest rate, number of periods, and net present value (NPV).

Calculate the price of a bond and the yield to maturity (YTM).

Calculate the stock price and required return of a stock.

Competency 3: Evaluate alternative methods of financing a firm in diverse economic

environments.

o

Compare four key characteristics of stocks and bonds.

Questions to Consider

To deepen your understanding, you are encouraged to consider the questions below

and discuss them with a fellow learner, a work associate, an interested friend, or a

member of the business community.

What is the importance of time value of money concepts, including compounding

(future value), discounting (present value), and annuities? Why do organizational

leaders need to understand these concepts?

What type of bond interests you? How is it different from other bonds?

How are bonds valued? How do interest rates affect the value of bonds? Consider

the importance of the yield to maturity (YTM).

Resources

Suggested Resources

The resources provided here are optional. You may use other resources of your

choice to prepare for this assessment; however, you will need to ensure that they

are appropriate, credible, and valid. They provide helpful information about the

topics in this unit. The MBA-FP6016 Finance and Value Creation Library Guide can

help direct your research. The Supplemental Resources and Research Resources,

both linked from the left navigation menu in your courseroom, provide additional

resources to help support you.

The following resources will provide assistance to complete the assessment.

o

o

o

o

Assessment Problems Helpful Tips [DOCX].

Excel Examples [XLS].

The following texts are designed to assist learners to master core concepts, solve

financial problems, and analyze results.

Boundless. (n.d.). Boundless finance. Retrieved from

https://www.boundless.com/finance/textbooks/boundless-finance-textbook/

Chapter 5, “Time Value Money”.

Chapter 6, “Bond Valuation”

Chapter 7, “Stock Valuation”.

Chapter 15, “Dividends”.

Additional Resources for Further Exploration

The following texts are designed to assist learners to master core concepts, solve

financial problems, and analyze results.

o

o

o

o

o

o

Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2014). Corporate finance:

Core principles and applications (4th ed.). New York, NY: McGraw-Hill. – Available

from the bookstore

Chapter 4, “Discounted Cash Flow Valuation,” pages 82128.

Chapter 5, “Interest Rates and Bond Valuation,” pages 129163.

Chapter 6, “Stock Valuation,” pages 164194.

The text offers an introductory look at corporate finance.

Welch, I. (207). Corporate finance (4th ed.). Retrieved from http://book.ivowelch.info/read/.

Chapter 3, “Stock and Bond Valuation: Annuities and Perpetuities,” pages 37-53.

Chapter 5, “Time-Varying Rates of Return and the Yield Curve,” pages 75-103.

Chapter 15, “Valuation from Comparables and Financial Ratios,” pages 387-421.

Assessment Instructions

Demonstrate your understanding of financial concepts by completing the following

problems. Where appropriate, show or explain your work. It is recommended that

you use Excel and its built-in formulas to work on the problems.

Problem 1. Calculate the future value of $3,500, compounded annually for each of

the following:

10 years at 7 percent.

15 years at 9 percent.

20 years at 5 percent.

Problem 2. Calculate the present value for each of the following:

Problem 2. Calculating Present Values

Present Value

Years

Interest Rate

Future Value

5

4%

$15,250

8

7%

$30,550

12

10%

$850,400

20

15%

$525,125

Problem 3. Calculate the interest rate for each of the following:

Problem 3. Calculating Interest Rates

Present Value

Years

Interest Rate

Future Value

$282

2

$325

$607

6

$891

$32,600

12

$142,385

Problem 3. Calculating Interest Rates

Present Value

Years

$57,435

22

Interest Rate

Future Value

$463,200

Problem 4. Calculate the number of years in each of the following:

Problem 4. Calculating the Number of Periods

Present Value

Years

Interest Rate

Future Value

$765

6%

$1,385

$845

9%

$4,752

$17,200

11%

$432,664

$23,700

14%

$182,529

Problem 5. Refer to the cash flows listed for the Kelly Company investment projects

in the table below. The discount rate is 6 percent. Calculate the present value of

these cash flows as well as the present value at 12 percent and at 17 percent.

Problem 5. Present Value and Multiple Cash Flows

Year

Cash Flow

1

$750

Problem 5. Present Value and Multiple Cash Flows

Year

Cash Flow

2

$840

3

$1,230

4

$1,470

Problem 6. Value the bond Midcorp has issued, with the following characteristics:

Par: $1,000.

Time to maturity: 28 years.

Coupon rate: 7.50 percent.

Semiannual payments.

Calculate the price of this bond if the yield to maturity (YTM) is each of the

following:

7.50 percent.

9 percent.

4 percent.

Problem 7. Calculate the bond yield in the following scenario: Two years ago,

Walters Electronics Corporation issued 20-year bonds at a coupon rate of 6.75

percent. The bonds make semiannual payments, and currently sell for 106 percent

of par value. Calculate the YTM.

Problem 8. Calculate the stock value in the following scenario: The next dividend

payment by RST Incorporated will be $3.45 per share. The dividends are projected

to sustain a 6.50 percent growth rate into the future. If RST stock currently sells for

$67 per share, what is the required return?

Problem 9. Calculate the stock value in the following scenario: Nickels Corporation

will pay a $3.10 per share dividend next year. The company plans to increase its

dividend by 4.25 percent per year, indefinitely. How much will you pay for the

company’s stock today if you require a 12 percent return on your investment?

Problem 10. Provide a three-column table identifying four key characteristics of

stocks (equity) and bonds (debt) and comparing them. Briefly discuss why a firm

would prefer one over the other as a method of financing.

…

Purchase answer to see full

attachment

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.